The pound declined for a third day versus the dollar after Federal Reserve Chairman Ben S. Bernanke said yesterday U.S. policy makers could next year end asset purchases that have debased the U.S. currency.
Sterling dropped to the lowest level in two weeks against its U.S. peer after Bernanke said the Fed may “moderate” its $85 billion in monthly purchases, known as quantitative easing, later this year if economic growth is consistent with its forecasts. The U.K. currency was little changed versus the euro before a report that economists said will show retail sales increased in May. The U.K. Debt Management Office is due to auction 4.75 billion pounds ($7.3 billion) of five-year gilts.
The pound dropped 0.3 percent to $1.5433 at 7:46 a.m. London time after sliding to $1.5427, the lowest since June 6. Sterling traded at 85.81 pence per euro after touching 85.91, the weakest since May 30.
U.K. retail sales including fuel rose by 0.8 percent last month after slipping by 1.3 percent in April, according to the median estimate of 23 economists in a Bloomberg News survey.
A gauge of manufacturing orders rose to minus 12 this month from minus 20 in May, the Confederation of British Industry will say today, according to the median forecast of 13 analysts surveyed by Bloomberg.
Sterling has strengthened 3.3 percent in the past three months, the best performer after the euro among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. Europe’s common currency gained 3.5 percent and the dollar advanced 0.8 percent.
The U.K. last sold five-year debt on May 14 at an average yield of 0.967 percent. That compares with a record-low 0.787 percent, set at an auction on Nov. 20.
U.K. gilts have handed investors a loss of 1.8 percent this year through yesterday, according to Bloomberg World Bond Indexes. German bonds dropped 0.9 percent and Treasuries declined 1.8 percent, the indexes show.
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